Sense on Cents

While many eyes here in America are distracted by the ongoing political noise emanating from Washington, there are significant market moving developments with long-term implications happening overseas.

Let’s first look east to China and Japan. There are two major stories in this region:

1. Chinese banks are putting restrictions on new lending. This effective tightening of credit is a result of concerns that excessive speculative lending has created an asset bubble. The major Chinese stock index sunk to a three month low on this news. This development out of China has supported the greenback in a flight to safety.

2. Japan’s sovereign credit rating may be cut by S&P, as the rating agency believes that the ‘Land of the Rising Sun’ has limited flexibility to deal with its massive government debt load.

Moving westward, news out of the United Kingdom is good  . . . or is it? (more…)